To some, they think it is the holy grail of business opportunities. To others, they fear it so much that they think of it as a scam or a pyramid scheme.
Whatever you think network marketing is about; it is defined by governmental regulations as a distribution channel - nothing more. But what kind of distribution channel? The best way to dissect what network marketing is all about is to study the traditional distribution channel before we talk about the network marketing model:
The manufacturer:
Manufacturers are the ones who produce products (often, finished products) in bulk. They only deal with agents or wholesalers directly. As a customer, if you want to buy a chocolate bar, you can walk up to a chocolate bar wholesaler and ask them for ONE chocolate bar. They will probably as you which dealer are you with or they will attempt to sell you a few boxes at the same time.
The Agents:
These agents are usually the middlemen who negotiate suppliers and distributor’s contracts between the distribution channels. Some manufacturers might cut out the agents and deal directly with the wholesalers, but these agents are the gatekeepers because they make sure that all the arrangements fall within the boundaries of the law in import and export.
The Wholesaler:
Wholesalers function as the people who keep stock and they deal directly with the retailers. Wholesalers negotiate with manufacturers and agents to store the production of goods and they distribute necessary stock (whether on consignment or otherwise) to keep the retailers stocked up.
Retailer:
Retail owners are the only group of sellers who deals directly with the customer. They collect stock from the wholesalers as their main suppliers.
Customer:
After going through so many channels, the customer finally purchase the product after passing through so many middlemen. The price is marked up so many times that the real cost of the product remains at times, an illusion to many.
Here's how network marketing comes into the picture:
Firstly, network marketing does away with all the middlemen.
The network marketers bridge the gap directly between the manufacturer (the network marketing company) and the consumer. In other words, instead of going through agents and wholesalers, network marketing reps bring the product directly to the doorstep of the customers without paying all the guys in between.
There is another benefit of being in network marketing, the customer of the product can also become a distributor and vice versa. For example, the customer might like the product so much that he or she can join the network marketing company as a distributor and enjoy the goods at a special 'wholesaler' price. The existing distributors of the company might even consume the product by themselves thus becoming their own customer at the same time.
At the end of the day, network marketing is considered one of the most cost effective distribution channels to distribute a product because it adds the personal touch (when it comes to sharing), they save money on unnecessary middlemen and they empower every distributor to sponsor their own team of resellers (downlines) to make profit from selling their products.
Jaz Lai is a online network marketing expert. Download your free white paper and audio on how to use the internet to Double or Triple your organization within the next 30 days. Available for the next 24 hours only, click below for instant access :
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Source: http://www.womensarticles.com/article_566499_6.html
